Hallwood Exploration joins Occidental off Peru

Occidental Petrolera del Peru Inc. and its partner, Hallwood Exploration Company Peru, in Block Z-3 off Peru expect to obtain a 6-month extension in the second exploration stage from Perupetro, the state oil agency. Hallwood has agreed to 15% interest in Block Z-3, and the two companies expect to sign the extension soon.

May 8, 2001

By an OGJ Online Correspondent

LIMA, May 8 -- Occidental Petrolera del Peru Inc. and its partner, Hallwood Exploration Company Peru, in Block Z-3 off Peru expect to soon sign a 6-month extension in the second exploration stage from Perupetro, the state oil agency.

Hallwood, a subsidiary of Hallwood Energy Corp., Denver, has agreed to 15% interest in Block Z-3, and the two companies expect to sign for the extension once Hallwood legally is incorporated into the existing contract.

Occidental Petrolera is a subsidiary of Occidental Petroleum Corp., Los Angeles.

The original contract required an exploration well to be drilled in the second stage. Under the expected modification, the companies are required to drill an exploration well in the third stage. This change allows them to evaluate reservoir risks before drilling.

Occidental and Hallwood also will seek additional partners for the exploration drilling.

Occidental signed its original contract for Block Z-3 in January 1998. The company has also begun work on a technical evaluation assessment in central jungle Block 21 and said that it has presented a proposal to Perupetro for a contract in Block 22.